Craig v Hogg
| Jurisdiction | Scotland |
| Judgment Date | 17 October 1896 |
| Docket Number | No. 2. |
| Date | 17 October 1896 |
| Court | Court of Session |
Lord Low, Lord Justice-Clerk, Lord Young, Lord Adam, Lord M'Laren, Lord Kinnear, Lord Trayner, Lord Moncreiff.
Judicial FactorProcessExpensesDecree against defender as judicial factorPersonal liability.
A judicial factor upon the estate of a person deceased defended an action brought against him as judicial factor by a creditor of the deceased. An interlocutor was subsequently pronounced ordaining the defender as judicial factor to make payment to the pursuer of 159, and finding the defender as judicial factor liable in expenses to the pursuer.
Held (by a majority of seven Judges, Lord Young, Lord Adam, Lord M'Laren, Lord Kinnear, and Lord Moncreiff, diss. Lord Justice-Clerk and Lord Trayner) that the interlocutor could not be construed as imposing on the defender personal liability for expenses.
Question, whether a judicial factor who litigates unsuccessfully is as a general rule personally liable for expenses to the successful party.
Opinions (affirmative) per Lord Justice-Clerk, Lord M'Laren, Lord Trayner, and Lord Moncreiff.
Opinions (negative) per Lord Young, Lord Adam, and Lord Kinnear.
Gordon v. Campbell, 1842, 1 Bell's App. 428, and Ferguson v. Murray, December 20, 1863, 16 D. 260, commented on.
On 13th December 1892 James Craig, chartered accountant, Edinburgh, was appointed judicial factor on the estates of the deceased Archibald Rodan Hogg, solicitor, Edinburgh. The principal asset of the estates consisted of a claim for repayment of 2026, 8s. 9d. of cash advances made to a Mr John Baird, builder, Edinburgh, secured over the reversion of certain heritable subjects.
On 21st April 1893 the Reverend David Nasmyth Hogg of Auchtermuchty raised an action of accounting against Mr Craig as judicial factor foresaid, calling for exhibition and production of an account of the whole intromissions of Archibald Rodan Hogg as executor of his deceased brother Dr Robert Hogg, or as vitious intromitter, and craving that Mr Craig, as judicial factor foresaid, should be decerned to make payment to the pursuer as one of the next of kin of Dr Hogg of the sum of 1000, or such other sum as might appear to be the balance due to him, and in the event of Mr Craig failing to produce an account, craving for decree against him as judicial factor foresaid, of the sum of 1000, which should in that case be held to be the balance due as aforesaid.
Mr Craig lodged defences, and upon 1st March 1894 the Lord Ordinary (Low) pronounced an interlocutor decerning and ordaining the defender, as judicial factor of Archibald Rodan Hogg, to make payment to the pursuer of 159, 6s. 8d., with interest: Finds the defender, as judicial factor foresaid, liable in expenses to the pursuer.*
An interlocutor was subsequently pronounced giving decree for 179, 6s. 11d., the taxed amount of expenses.
Mr Craig failed to pay the principal sum or the expenses.
The pursuer thereupon extracted the interlocutors, and on 28th May 1895 charged Mr Craig to make payment of the sum of 179, 6s. l1d., being the taxed amount of the pursuer's account of expenses, and the sum of 19s. 8d., being the dues of extract.
Mr Craig presented a note of suspension of the charge. He averred,(Stat. 5) The deceased A. R. Hogg at his death had, among other assets, a sum of 2026, 8s. 9d. owing to him, secured, subject to prior bonds, over certain heritable properties in Edinburgh which had belonged to a Mr Baird. The judicial factor has endeavoured to realise these properties, so as to yield a surplus to the factory estate, but so far without success. It is the failure to realise this outstanding asset which prevents the creditors being settled with. The complainer never concealed the circumstances of the factory estate from the respondent, who, before he raised the said action, was well aware thereof, or at all events he could have ascertained the real position of the factory estate without the slightest difficulty.
The respondent answered,(Ans. 5) Explained that throughout the litigation in which the said expenses were incurred the complainer was aware (1) that the factory estate, after paying preferable debts, would not exceed in value the sum of 250; (2) that the unsecured debts of the deceased amounted to 3000 or thereby; (3) that the respondent's claim was for a ranking, and that the dividend payable to the respondent could not exceed 10 or thereby. Although fully aware of these facts, the suspender carefully concealed them from the respondent throughout the litigation. He was frequently called upon but always refused to give the respondent any information as to the estate of the deceased. In the circumstances it was improper for the complainer to embark in a litigation involving expenses on both sides of nearly 400, he well knowing that the sum at stake was only about 10, and his doing so was wilfully reckless, or at least reckless.
The complainer pleaded, inter alia;(1) In respect the decree founded upon does not warrant personal diligence against the complainer, he is entitled to suspension. (2) The complainer being liable only as judicial factor, the charge, in so far as directed against him personally, ought to be suspended. (3) The complainer, as judicial factor, having been called upon to defend the estate under his administration, and litigated in bona fide, the respondent is not entitled to compel him to pay out of his own funds the expenses found due.
The respondent pleaded, inter alia;(2) The charge complained of being authorised by the said decree as the warrant thereof, the note should be refused. (3) The suspender, having been all along aware that the estate under his charge was insolvent and unable to pay the
pursuer anything but a nominal dividend on his claim, and having insisted in the defence of said action in the knowledge of said facts which, though frequently called on to disclose the extent and circumstances of the estate under his charge, he concealed from the respondent, was not litigating in bona fide, and is personally liable to the respondent for the expenses of such litigation.
On 10th January 1896 the Lord Ordinary (Low) refused the prayer of the note of suspension.*
The complainer reclaimed, and after bearing parties the Court appointed the case to be argued before them and three Judges of the First Division.
Argued for the complainer;The general rule that the unsuccessful party must pay the expenses of an action rendered necessary by his opposition to a just claim1 did not apply. (1) The complainer was called merely as judicial factor, and a judicial factor was not personally liable for expenses if he had no factorial estate in his hands with which to pay them.2 This proposition was founded upon considerations of reason and justice. A judicial factor differed from a testamentary trustee or a trustee in bankruptcy (in which cases it was admitted there was personal liability for expenses), in this respect, that he lacked the power they possessed of consulting those who were interested in the estate either as beneficiaries or creditors. There were, moreover, special circumstances in the present case which rendered the general rule as to expenses inapplicable. The judicial factor had acted reasonably, in the opinion of the Lord Ordinary, in defending the action.3 He was a defender, not a
pursuer.1 The action was raised after the death of his principal. The estate, though valueless now, might some day improve, and the whole sum ultimately be recovered. A large sum had been sought in the action, and a small one obtained. But (2) in any view, while the conclusions of the summons might have been framed against the complainer either (1) personally or (2) qua judicial factor, or (3) qua judicial factor and personally, the summons had been limited to a conclusion against him qua judicial factor. The Lord Ordinary had accordingly pronounced decree against him in these terms, and must be held to have decided in the original process whether in the circumstances the complainer should or should not be held personally liable. Now, properly construed, the decree imported that the complainer's liability was limited to the amount of the factorial estate in his hands.2 The words were distinct and intelligible words of limitation, restricting the decree to one against him in his representative capacity. Where it was intended that in the event of the factory estate proving insufficient the factor should be personally liable to
make good the deficiency, it should be expressly stated in the decree.1Gordon's case2 was subsequent in date to the cases of Gibson v. Pearson,3 and Scott v. Patison,4 relied upon by the respondent.
Argued for the respondent;The general rule enunciated in White v. SteelSCUNK5 had been given effect to in the case of testamentary trustees6 sued as such, and they were bound to pay the expenses whether they held trust funds in their hands or not. It also applied to a trustee in bankruptcy7 in reference to an action concerning the sequestrated estate, and it had been held that it was not a relevant answer to a charge for expenses for him to say that he had no funds belonging to the estate.8 The rule also applied to a liquidator appointed by the Court under the Companies Acts.9 There was no reason why it should not be given effect to in the case of a judicial factor who had litigated unsuccessfully, and had no factorial estate in his hands. The distinction, as regarded liability for expenses, between a judicial factor and a trustee in bankruptcy, alleged to consist in the latter's power to consult the creditors interested in the estate, did not exist; for a judicial factor could equally do this, and he was moreover paid for his services. The fact that the complainer was called and defended the action as judicial factor instead of electing to pursue the action, made no difference in his liability for expenses. The case of Ferguson v. MurrayUNK10 relied on by the complainer was really an authority...
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